A preliminary agreement has been reached to enable the restructuring of the Kopex Group financial debt

Today, after several months of negotiations, the document called Key conditions for restructuring of the financial debt of Kopex SA and its selected subsidiaries was signed (i.e. term sheet), which defines the direction of Kopex Group debt restructuring. The main objective of the document signed is to steer away the risk of bankruptcy of Kopex Group companies, adjust the financial debt payment terms to a difficult financial situation of the Group and to create opportunities to satisfy claims of financial creditors to the largest possible extent.

The term sheet outlines key directions and objectives of restructuring activities, including the repayment of debts from the funds earned from operations and through the disposal of assets the value of which is insufficient to meet all obligations accrued within Kopex Group. The above factors call for the restructuring of debt and urgent implementation of the restructuring plan for the Kopex Group companies, prepared by the Management Board of Kopex in collaboration with external advisors,. It is a difficult and very ambitious plan, its implementation however is absolutely necessary and should be completed by the end of 2021 the latest. – The restructuring program for the whole Kopex Group and its implementation are required by the banks to provide further funding of Kopex.Moreover, as an Investor, we are expected by the banks to fully engage in the implementation of this program immediately after taking control of Kopex, as it is believed that only with the resources, experience and know-how of TDJ it is possible to successfully the objectives of the plan. An additional requirement expressed by banks was the rescue funding provided to Kopex Group by an Investor. As TDJ Group, we have declared such funding in the amount of PLN 100 million. It should be also further noted that the major part of the price amount due for the purchase of another share package from Mr Krzysztof Jędrzejewski, i.e. PLN 60 million, will go directly to Kopex for the repayment of loans. Financial institutions agreed to sell some part of receivables at a discount to our benefit provided that we fulfill the restructuring program as required by banks. The compromise was very difficult to achieve. We are treating the conditions set before us by the banks as a huge challenge and for us they are the boundary conditions. – says Czeslaw Kisiel, the President of the Management Board of TDJ. Signing the agreement does not end the talks and work on the final form of debt restructuring of Kopex Group, the detailed conditions and course of which will be agreed only in the restructuring agreement. However, it represents an essentail step forward and the expression of will and determination of the parties in a bid to rescue Kopex Group. This document in its current form is the basis for further negotiations regarding the contents of the restructuring agreement to be concluded between the banks, the companies of Kopex Group and the Investor, establishing detailed conditions of restructuring and its course. The aim of the parties involved is to agree and sign the restructuring agreement by the end of November. The negotiations conducted with financial creditors of Kopex Group are the result of the conditional agreement for the acquisition of controlling stake in Kopex SA, signed on 17 March this year by TDJ, a special purpose vehicle, and Mr Krzysztof Jędrzejewski. Under this agreement, the agreement on the Kopex debt restructuring is one of the necessary conditions for the consolidation process in the mining-related industry. So far, TDJ has already obtained consent from the President of the Office for Competition and Consumer Protection for taking control of Kopex SA Apart from accepting the results is the ongoing, complex due diligence, the second necessary step will be to determine the final shape and conditions of restructuring, confirmed by the conclusion of the restructuring agreement. Due dilligence process of Kopex Group companies confirms their dramatic state, as the real value of the assets is radically different from the one presented in the past. This is confirmed by the write-downs in the amount of PLN 1.4 billion, created in the current year, and those planned for the future in the amount of more than PLN 0.5 billion. – Following the conditional agreement signed in March, we have engaged with full determination in trying to save the brand and the potential of Kopex Group. As a result of the combined work of advisors, full commitment of the banks and of us as an investor, despite the long and difficult negotiations, we have developed a proposal for Kopex debt restructuring, which to the largest extent takes into account the expectations of all financial creditors and therefore it has been approved by them. In recent months, we have done everything possible to work out the proposal that will be accepted by all financial institutions, reconciling their often conflicting interests – says Czeslaw Kisiel. – However, this is still the beginning of work. Only after signing the restructuring agreement and positive completion of due diligence, we will be fully able to carry out the consolidation of the industry through the integration of the key mining background companies in FAMUR Group. This way we will get a chance to create a strong Polish entity, which through a combination of its market position, developed know-how and experiences of Famur and Kopex, will have a chance to implement complex projects for the mining sector worldwide through the effective competition with global giants of mining-related industry- he adds. In the face of steadily deteriorating situation of Kopex Group, the full involvement of TDJ in rescuing the company and reaching an agreement with banks creates a real opportunity to retain part of the Group’s capabilities and potential, and as a consequence, to maintain many of the existing jobs in Kopex. – We believe that in light of the crisis, which in the last few years has affected the mining industry in Poland, the consolidation is currently the best way for the development of the mining-related industry, which in the long term will allow for a significant increase in the scale, quality and efficiency of activities conducted on the Polish market and abroad. It should be emphasized that for the successful process of potential integration of Kopex Group and FAMUR Group, the key factor is the early start of the restructuring process of Kopex and its subsidiaries. Lack of decisive and speedy corrective action means that the scale of the problems that affect Kopex Gropu and their consequences are deteriorating every month. In the current market situation, the deep restructuring of Kopex is inevitable and it is the only chance to save the company. We are aware that the process is difficult and long, but we are determined to complete it successfully. We trust that the industry consolidation will be the joint work of the employees and shareholders of TDJ and Kopex – adds Czesław Kisiel.

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